Earlier
reports stated that Google and Facebook were duking it out to get a piece
of Skype, but in the end Steve Ballmer and Microsoft's huge chest of cash put
an end to those discussions. The earlier reports also pointed to a Skype
valuation of $3 to $4 billion, so Microsoft's $8.5 billion purchase price
hopefully will bring a hefty ROI.

The first beta of Skype was introduced in 2003,
and as of December 2010, it had over
663 million registered users. The average number of monthly connected users
is much lower, however, at 145 million. And when it comes to users that
actually pay for the service, the numbers drop down to just 8.8 million.

Registered users can make Skype-to-Skype calls
and one-to-one video calls for free. Users can make Skype-to-phone calls at a rate
of 2.3 cents/minute.
Skype also offers subscription plans at a rate of 1.2 cents/minute.

We'll have to wait a few more hours until we get all the juicy
details on Microsoft's latest acquisition, but we're betting that the boys from
Redmond plan on tightly integrating Skype with Windows Phone 7 to better
compete with Google Voice.

Updated 5/11/2011 @
8:34am

Well, the news is now official. Microsoft just announced
that it is acquiring Skype for $8.5 billion in cash. Microsoft says that Skype
will bolster its "existing portfolio of real-time communications products
and services."

As expected, Skype will be tightly integrated into the Xbox
360 and Windows Phone 7 platform. Microsoft is also creating a new business
division called the Microsoft Skype Division, which will be headed by Skype CEO
Tony Bates (he will report directly to Microsoft CEO Steve Ballmer).

“Skype is a phenomenal service that is loved by millions of
people around the world,” said Ballmer. “Together we will create the future of
real-time communications so people can easily stay connected to family,
friends, clients and colleagues anywhere in the world.”

“Microsoft and Skype share the vision of bringing software
innovation and products to our customers,” said Bates. “Together, we will be
able to accelerate Skype's plans to extend our global community and introduce
new ways for everyone to communicate and collaborate.”